Much Ado About Nothing in Budget Debate

All the sturm and drang in Washington over the March 1 deadline for a budget deal is an act. Two acts really.

The Republicans are pretending that if we don’t have budget cuts this year, the whole US economy will collapse because of the nation’s enormous indebtedness.

The Democrats are pretending that if no deal is reached, and automatic across-the-board cuts of 8% for the Pentagon and 5% for other programs will not only put the nation’s defense at risk and cause widespread suffering, but that it will derail the nation’s fragile economic “recovery.”

Both claims are, to put it gently, bullshit.

To put it in perspective, remember we’re talking about $86 billion dollars in spending for this current year.

That’s in a federal budget of $3.5 trillion, and a national economy of $16 trillion. A little math is in order. One trillion dollars is $1000 billion dollars. So $86 billion dollars represents just 2.46% of the federal budget. And it represents just 0.5% of GDP.

To put that in context another way, in December Congress, with little discussion or fanfare, allowed federal funding for emergency unemployment benefits to expire. That sucked $30 billion out of the economy this year, taking it all from people who are jobless and desperate. At the same time, it ended the temporary 2% cut in the FICA payroll tax for Social Security. That sucked another $115 billon out of all workers’ pockets. So a total of $145 billion was removed from the economy without any concern at all being expressed about the impact that hit would have on the economy, and we’re talking about an amount that’s nearly twice as much as the cut from so-called sequestration.

We could also talk about the over $400 billion in stimulus spending that the Obama administration and Democrats in Congress pumped into the economy in 2009. It clearly was an amount far too small to kickstart the economy out of the depression it had by then fallen into. Now if $400 billion was too small to accomplish much in 2009, how bad is taking out $85 billion in 2013?

Answer: it’s not such a big deal.

I think what’s going on here is a much more complicated dance. The Republicans want a cut in spending, not because they think it will make any difference in the nation’s $16 trillion dollar national debt, but so they can go back to their states in the next election cycle and claim that they finally “tamed the beast” of federal spending. Of course, they won’t have done any such thing even if they get that whole $86 billion cut. The budget was slated to grow by about $80 billion anyhow, so it’s likely imbedded growth in federal spending will in the end top the amount of the sequestration cut — especially if the US gets involved in another war in Syria or somewhere in Africa, or if there’s a crisis in Korea or some other part of Asia.

As for the Obama Administration and the Democrats in Congress, what they secretly want is cover to start cutting Social Security and especially Medicare. Since those two programs were exempted from sequestration cuts, their strategy is to cry “wolf” about the impact of sequestration in order to bully Republicans into some kind of budget-cutting deal that would have Republicans agree to a rise in taxes in some truly minor way on the rich, while in return Democrats would “grudgingly agree” to cuts in Medicare and maybe even Social Security. They will then be able to claim, to their progressive Democratic base, that the Republicans “made us do it.”

The way I see it, the answer to this subterfuge in Washington is to demand that sequestration be allowed to happen. For the first time in modern history, we would actually see America’s war machine take a hit. While an 8% cut in Pentagon spending would hardly be noticed by the generals, it would expose the long-running lie that the country’s security depends upon ever greater spending on war and preparing for war — a lie that now has the US spending more on war than the rest of the world combined.

Assuming that the Pentagon might lose some half of that $86 billion — say $43 billion for the sake of argument — that’s just 10% of the cost of the military’s $400-billion F-35 flying boondoggle — a fighter plane that already costs $166 million per unit, that is in production despite a schedule that won’t have it finished with flight testing until 2019, and that has flaws so great that it probably will never be able to fly an actual combat mission.

Still, as pathetic as that $86 billion cut would be, allowing sequestration to happen would at least protect Social Security and Medicare from the knife, forcing the Obama administration to keep its hands off those programs, at least for this year.

The New York Times reports today in a page one lead story that Republicans have surprised the White House by calling its bluff and saying, okay, go ahead and let the Pentagon budget get cut. Obama and the Democrats had hoped that by including the Pentagon in the sequestration cuts, they’d scare Republicans from holding the budget hostage. They were wrong. Now the public should join in and say, let’s have all the cuts!

We can deal with the aftershocks later. If teachers start to get laid off, the public can–and will–demand emergency funding to restore their jobs. If bridges start to fall, the public can demand transportation funding to repair them. Let’s restore funding in a positive way after the cuts by demanding it as the needs make themselves apparent.

It will be interesting to see how the War Department will demonstrate that it has to get its cut funds back. Nobody is going to see any greater threat to the US when the Pentagon loses $43 billion for the year. There won’t suddenly be an attack on the country. China won’t suddenly feel that it can bully the US Pacific fleet. Soldiers in Afghanistan won’t find they don’t have any fuel or ammo. The lights won’t be turned off at the Pentagon. Besides, if they want to make up for the lost revenue, they can just have the senior brass take a pay cut. Or they could walk out of Afghanistan early, which right there would save $88.5 billion, or more than the entire amount being sequestered from all departments.